Pine Valley Pension Fund's LDI Strategy Decision

Pine Valley Pension Fund is a large institutional investor with nearly $15 billion in assets under management. As part of its investment strategy, the fund has recently adopted a liability-driven investment (LDI) approach to better match its assets with its long-term liabilities. The investment committee is currently evaluating the implications of incorporating interest rate swaps and inflation-linked bonds into its portfolio to manage interest rate and inflation risk.

The fund's liability profile is characterized by fixed benefit obligations that are sensitive to changes in both interest rates and inflation. The investment committee is concerned that rising inflation could erode the purchasing power of future pension payouts, while increasing interest rates could negatively impact the market value of their bond portfolio.

Considering these factors, which of the following strategies would best help Pine Valley Pension Fund achieve its investment objectives while managing the specific risks associated with its liabilities?